David Toll
While all for aligning their interests with those of limited partners, buyout pros will have to hope that the exceptionally LP-friendly partnership terms offered by Public Pension Capital Management don’t spread too broadly. Then again, most funds don’t present investors with quite the risks that this particular debut offering does.
While all for aligning their interests with those of limited partners, buyout pros will have to hope that the exceptionally LP-friendly partnership terms offered by Public Pension Capital Management don’t spread too broadly.
Though eager to show job creation during his term, President Barack Obama didn’t mention the SBIC program or the Small Business Administration that administers it in accepting the Democratic nomination for president last week.
In our sister magazine Buyouts back in April 2007 I warned about the danger of the fee waiver strategy in the first of a two-part column on the unspoken risks of private equity.
Institutional investors often say they have trouble gaining access to top-quartile private equity firms. It suggests there exists a pantheon of repeat performers while the rest are condemned, fund after fund, to the lower ranks. But analysis of this year’s Buyouts fund returns database pokes holes in that notion.
On its very first try with a fund devoted to distressed investing, Los Angeles-based Aurora Capital Group managed to navigate the 2007-2009 recession with an aptitude that put its fund in the top ranks of vintage 2007 funds based on internal rate of return.
The 2007 vintage was a tough one for domestic buyout funds, between the credit crunch, financial crisis and Great Recession. But some firms managed to buck the trend.
Investors who routinely take a pass on debut buyout funds would readily admit they miss out on the occasional blockbuster. But they may also be missing out on returns that over time consistently beat market averages.
On conference panels, in interviews, through surveys, limited partners routinely telegraph the notion that they prefer the small and mid-sized to the mega. But the U.S. buyout fundraising numbers this year tell a different story.
Dividend recaps may be controversial but Roark Capital hasn't been shy about using them to return hundreds of millions of dollars to its limited partners.